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Holiday Sales Hinge More on Customer Service, Say Retail Experts

Excessive negativity in media headlines predicting low sales during the holidays doesn’t help business, said local retail analyst George Whalin.

Though other analysts issue reports every year with varying forecasts of retail sales in November and December, the predictions fail to agree, Whalin said.

The National Retail Federation says holiday consumer spending will increase 4 percent, the smallest gain in five years. The International Council of Shopping Centers predicts an increase of 2 percent for same-store sales and business consultant Deloitte & Touche USA LLP says sales will increase by 4.5 percent.

Whalin said accuracy is a constant challenge for retail analysts, since most retailers keep sales figures under wraps.

“I don’t give a number anymore,” Whalin said.

“Every year, I realized I was wrong and so was everybody else,” he added. “Some people start Christmas shopping in July, and some start on Christmas Eve, so the traditional season has changed, making estimations difficult.”

Perhaps the most significant of those changes is the popularity of gift cards or cash cards, he said.

Sales of cards are not counted until redemption, which has made January a moneymaker for retailers.

The ICSC estimates that $15 billion to $20 billion of holiday-generated sales will come from gift cards, with 30 percent to 40 percent of redemptions occurring from the week after Christmas into January.


Popular Products

While retailing remains relatively sluggish, certain products will keep merchants’ heads above water this year.

NRF reported that consumer electronics and luxury goods will continue to bring in strong gains, escaping overall market trends during the holiday season. Gadgets have shown up on both men’s and women’s wish lists, according to a Circuit City Stores Inc. market research report.

Forty percent of people selecting electronics as the top choice covet flat-screened televisions the most, followed by computers, GPS navigation systems and digital cameras.

Nationwide retailers such as Nordstrom, Bloomingdale’s, Neiman Marcus and Saks Fifth Avenue, all with stores at Fashion Valley, seem to be untouched by the slowdown in the economy, according to Francine Miley, director of marketing for the high-end mall.

Miley said she believes that gadgets such as the iPod and other consumer electronics will continue to be in high demand this year, as those relatively affordable goods appeal to all ages.

“Luxury goods and brands are doing so well in this market, and Fashion Valley does cater to that kind of buying,” Miley said.

Indianapolis-based Simon Property Group Inc. operates Fashion Valley, while subsidiary Chelsea Property Group manages San Ysidro’s Las Americas Premium Outlets.

Holiday retail sales as reported by the NRF were $456.2 billion in 2006, roughly 20 percent of annual retail industry sales for that year.

Wal-Mart has tapped into the demand for preseason shopping by offering Black Friday prices earlier this year than previous years. In 2006, the company slashed prices only two weeks before Black Friday.

On Nov. 1 of this year, the retailer announced sale products such as a 50-inch Sanyo brand plasma television for $998, and an Acer brand laptop computer for $348.

Wal-Mart would not disclose how many of the items were sold within the first week, but company spokeswoman Tiffany Moffatt said that customers are taking advantage of the early sales.

“We are meeting the customer demand to get even more of a jump-start on holiday shopping each year,” Moffatt said.

Among popular children’s toys this year, she said, are a kids’ digital camera and a Smart Cycle, both from Fisher-Price, and a Spider-Man 3 action figure. Other trend items are Blu-ray DVD players and digital cameras, which sell for under $100 at Wal-Mart.

The retailer plans to announce new sale items each Friday for upcoming weeks before Christmas.

“More adults play video games and use electronics than kids these days, so when companies aggressively advertise slashed prices, these are the things people will wait for two hours in lines at 5 o’clock in the morning,” added Whalin.


Holiday Spirit

Perhaps most influential to consumer spending, Whalin said, is retailers’ holiday spirit.

“Regardless of the tepid sale projections everywhere, there will be those who hit or even exceed their goals,” Whalin said. “The difference will be the way retailers execute in their stores, how customers are treated and the attitude of employees.”

National chains like Sears and Kmart that have cut “frivolous” spending on items like holiday decorations, Whalin said, are missing the point.

“Last year I walked into a Kmart two weeks before Christmas and not one holiday decoration or sign was displayed,” Whalin said. “That kind of budget cut will be damaging for the retailer.”

NRF and ICSC reports have shown that stores investing in such decorations are coming out ahead.

“Nordstrom has such beautiful displays during November and December, and they don’t put anything up until the day after Thanksgiving,” said Miley.

Laura Ann Fairchild, owner of L.A. Fairchild Denim Bar boutique in Cardiff-by-the-Sea, said in-store events surrounding holidays and special occasions have always been her favorite way to promote her trendy designer jeans.

“This year’s theme will be ‘Deck the Halls With Denim’ at the holiday party,” Fairchild said. “We’ll also have in-store wish list signage so that shoppers are able to come in and put items and sizes on file.”

Fairchild estimates that 7 percent of all holiday sales come from gift card redemptions.

Brian Miller, owner of local toy store operator Geppetto’s, said he believes shopping for children, especially during the holidays, should be a fun, memorable experience.

“People tend to splurge on their kids and grandkids. Even if money is tight, the significant cutbacks likely aren’t going to be on their children,” said Miller.

His company’s six San Diego stores enjoyed good business this year, especially after the recalls of Chinese-made toys. Miller posted double-digit increases in October over the same month last year.

“People flocked to smaller stores, and anticipating that, we prepared early and brought all of our holiday merchandise in extremely early this year. The supply cycle is very slow at the end of the year,” said Miller.

Miller said among the most popular children’s toys this year will be Webkinz, a stuffed animal made by the Cheektowaga, N.Y.-based company Ganz. The animal comes with an individual tag number, which children can use to register online and join others in a virtual world.

In light of October’s wildfires, Miller said board games and other indoor toys likely will be an important component of his inventory this year, as he believes parents will plan ahead for indoor activity in the future.

“Exactly how much the fires will impact holiday season spending is hard to quantify, but one can expect some loss to retailers,” Whalin said. “Many families are still displaced and overloaded with things other than shopping.”

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